Janet, (single) has the following items for 2006:
- Salary $140000
- Home mortgage interest $10,000
A hurricane completely destroyed her duplex during the current year. She lived in half of the duplex & rented the other half. She paid $400,000 for the duplex & has taken $80,000 of cost recovery on the rental portion. It was worth $420000 at the time of destruction. Janet's insurance policy paid her 90% of the FMV.
Household items destroyed in the hurricane had a basis of $15,000 & FMV of $8500. There was no insurance recovery on household items.
Janet purchased a painting 3 years ago for $4000. At the time of the hurricane, the painting was worth $10000. She purchased the painting as an investment w/ the intent to sell it when its value exceeded $12,000. There was no insurance recovery on the painting.
Compute Janet's Taxable Income For 2006
We start with the salary (income) $140,000. We first deduct the mortgage interest $10,000 to get the Adjust Gross Income (AGI) = ...
The expert examines the taxable income and home mortgage interest rates. A hurricane destroying a house and the taxable income for the list is determined.